8/21/2019 G.R. Nos. 89898-99
89898-99
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Constitution Statutes Executive
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 89898-99 October 1, 1990
MUNICIPALITY OF MAKATI, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, HON. SALVADOR P. DE GUZMAN, JR., as Judge RTC of Makati,
Branch CXLII ADMIRAL FINANCE CREDITORS CONSORTIUM, INC., and SHERIFF SILVINO R. PASTRANA,
respondents.
Defante & Elegado for petitioner.
Roberto B. Lugue for private respondent Admiral Finance Creditors' Consortium, Inc.
RESOLUTION
CORTÉS, J.:
The present petition for review is an off-shoot of expropriation proceedings initiated by petitioner Municipality of Makati against private respondent Admiral Fina
Creditors Consortium, Inc., Home Building System & Realty Corporation and one Arceli P. Jo, involving a parcel of land and improvements thereon locate
Mayapis St., San Antonio Village, Makati and registered in the name of Arceli P. Jo under TCT No. S-5499.
It appears that the action for eminent domain was filed on May 20, 1986, docketed as Civil Case No. 136
Attached to petitioner's complaint was a certification that a bank account (Account No. S/A 265-537154-3) had be
opened with the PNB Buendia Branch under petitioner's name containing the sum of P417,510.00, made pursu
to the provisions of Pres. Decree No. 42. After due hearing where the parties presented their respective appra
reports regarding the value of the property, respondent RTC judge rendered a decision on June 4, 1987, fixing
appraised value of the property at P5,291,666.00, and ordering petitioner to pay this amount minus the advanc
payment of P338,160.00 which was earlier released to private respondent.
After this decision became final and executory, private respondent moved for the issuance of a writ of executi
This motion was granted by respondent RTC judge. After issuance of the writ of execution, a Notice of Garnishm
dated January 14, 1988 was served by respondent sheriff Silvino R. Pastrana upon the manager of the P
Buendia Branch. However, respondent sheriff was informed that a "hold code" was placed on the account
petitioner. As a result of this, private respondent filed a motion dated January 27, 1988 praying that an order
issued directing the bank to deliver to respondent sheriff the amount equivalent to the unpaid balance due under
RTC decision dated June 4, 1987.
Petitioner filed a motion to lift the garnishment, on the ground that the manner of payment of the expropriat
amount should be done in installments which the respondent RTC judge failed to state in his decision. Priv
respondent filed its opposition to the motion.
Pending resolution of the above motions, petitioner filed on July 20, 1988 a "Manifestation" informing the court t
private respondent was no longer the true and lawful owner of the subject property because a new title over
property had been registered in the name of Philippine Savings Bank, Inc. (PSB) Respondent RTC judge issued
order requiring PSB to make available the documents pertaining to its transactions over the subject property, a
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the PNB Buendia Branch to reveal the amount in petitioner's account which was garnished by respondent sheriff
compliance with this order, PSB filed a manifestation informing the court that it had consolidated its ownership o
the property as mortgagee/purchaser at an extrajudicial foreclosure sale held on April 20, 1987. After seve
conferences, PSB and private respondent entered into a compromise agreement whereby they agreed to div
between themselves the compensation due from the expropriation proceedings.
Respondent trial judge subsequently issued an order dated September 8, 1988 which: (1) approved the comprom
agreement; (2) ordered PNB Buendia Branch to immediately release to PSB the sum of P4,953,506.45 wh
corresponds to the balance of the appraised value of the subject property under the RTC decision dated June
1987, from the garnished account of petitioner; and, (3) ordered PSB and private respondent to execute
necessary deed of conveyance over the subject property in favor of petitioner. Petitioner's motion to lift
garnishment was denied.
Petitioner filed a motion for reconsideration, which was duly opposed by private respondent. On the other hand,
failure of the manager of the PNB Buendia Branch to comply with the order dated September 8, 1988, priv
respondent filed two succeeding motions to require the bank manager to show cause why he should not be held
contempt of court. During the hearings conducted for the above motions, the general manager of the PNB Buen
Branch, a Mr. Antonio Bautista, informed the court that he was still waiting for proper authorization from the P
head office enabling him to make a disbursement for the amount so ordered. For its part, petitioner contended t
its funds at the PNB Buendia Branch could neither be garnished nor levied upon execution, for to do so would res
in the disbursement of public funds without the proper appropriation required under the law, citing the case
Republic of the Philippines v. Palacio [G.R. No. L-20322, May 29, 1968, 23 SCRA 899].
Respondent trial judge issued an order dated December 21, 1988 denying petitioner's motion for reconsideration
the ground that the doctrine enunciated in Republic v. Palacio did not apply to the case because petitioner's P
Account No. S/A 265-537154-3 was an account specifically opened for the expropriation proceedings of the subj
property pursuant to Pres. Decree No. 42. Respondent RTC judge likewise declared Mr. Antonio Bautista guilty
contempt of court for his inexcusable refusal to obey the order dated September 8, 1988, and thus ordered
arrest and detention until his compliance with the said order.
Petitioner and the bank manager of PNB Buendia Branch then filed separate petitions for certiorari with the Cour
Appeals, which were eventually consolidated. In a decision promulgated on June 28, 1989, the Court of Appe
dismissed both petitions for lack of merit, sustained the jurisdiction of respondent RTC judge over the fun
contained in petitioner's PNB Account No. 265-537154-3, and affirmed his authority to levy on such funds.
Its motion for reconsideration having been denied by the Court of Appeals, petitioner now files the present petit
for review with prayer for preliminary injunction.
On November 20, 1989, the Court resolved to issue a temporary restraining order enjoining respondent RTC jud
respondent sheriff, and their representatives, from enforcing and/or carrying out the RTC order dated December
1988 and the writ of garnishment issued pursuant thereto. Private respondent then filed its comment to the petiti
while petitioner filed its reply.
Petitioner not only reiterates the arguments adduced in its petition before the Court of Appeals, but also alleges
the first time that it has actually two accounts with the PNB Buendia Branch, to wit:
xxx xxx xxx
(1) Account No. S/A 265-537154-3 — exclusively for the expropriation of the subject property, with
outstanding balance of P99,743.94.
(2) Account No. S/A 263-530850-7 — for statutory obligations and other purposes of the munici
government, with a balance of P170,098,421.72, as of July 12, 1989.
xxx xxx xxx
[Petition, pp. 6-7; Rollo, pp. 11-12.]
Because the petitioner has belatedly alleged only in this Court the existence of two bank accounts, it may fairly
asked whether the second account was opened only for the purpose of undermining the legal basis of the assai
orders of respondent RTC judge and the decision of the Court of Appeals, and strengthening its reliance on
doctrine that public funds are exempted from garnishment or execution as enunciated in Republic v. Palacio [sup
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At any rate, the Court will give petitioner the benefit of the doubt, and proceed to resolve the principal issu Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.
presented based on the factual circumstances thus alleged by petitioner.
The Lawphil Project - Arellano Law Foundation
Admitting that its PNB Account No. S/A 265-537154-3 was specifically opened for expropriation proceedings it h
initiated over the subject property, petitioner poses no objection to the garnishment or the levy under execution
the funds deposited therein amounting to P99,743.94. However, it is petitioner's main contention that inasmuch
the assailed orders of respondent RTC judge involved the net amount of P4,965,506.45, the funds garnished
respondent sheriff in excess of P99,743.94, which are public funds earmarked for the municipal government's ot
statutory obligations, are exempted from execution without the proper appropriation required under the law.

There is merit in this contention. The funds deposited in the second PNB Account No. S/A 263-530850-7 are pu
funds of the municipal government. In this jurisdiction, well-settled is the rule that public funds are not subject to le
and execution, unless otherwise provided for by statute [Republic v. Palacio, supra.; The Commissioner of Pu
Highways v. San Diego, G.R. No. L-30098, February 18, 1970, 31 SCRA 616]. More particularly, the properties o
municipality, whether real or personal, which are necessary for public use cannot be attached and sold at execut
sale to satisfy a money judgment against the municipality. Municipal revenues derived from taxes, licenses a
market fees, and which are intended primarily and exclusively for the purpose of financing the governmen
activities and functions of the municipality, are exempt from execution [See Viuda De Tan Toco v. The Munic
Council of Iloilo, 49 Phil. 52 (1926): The Municipality of Paoay, Ilocos Norte v. Manaois, 86 Phil. 629 (195
Municipality of San Miguel, Bulacan v. Fernandez, G.R. No. 61744, June 25, 1984, 130 SCRA 56]. The forego
rule finds application in the case at bar. Absent a showing that the municipal council of Makati has passed
ordinance appropriating from its public funds an amount corresponding to the balance due under the RTC decis
dated June 4, 1987, less the sum of P99,743.94 deposited in Account No. S/A 265-537154-3, no levy un
execution may be validly effected on the public funds of petitioner deposited in Account No. S/A 263-530850-7.

Nevertheless, this is not to say that private respondent and PSB are left with no legal recourse. Where
municipality fails or refuses, without justifiable reason, to effect payment of a final money judgment rendered agai
it, the claimant may avail of the remedy of mandamus in order to compel the enactment and approval of
necessary appropriation ordinance, and the corresponding disbursement of municipal funds therefor [See Viuda
Tan Toco v. The Municipal Council of Iloilo, supra; Baldivia v. Lota, 107 Phil. 1099 (1960); Yuviengco v. Gonzal
108 Phil. 247 (1960)].

In the case at bar, the validity of the RTC decision dated June 4, 1987 is not disputed by petitioner. No appeal w
taken therefrom. For three years now, petitioner has enjoyed possession and use of the subject prope
notwithstanding its inexcusable failure to comply with its legal obligation to pay just compensation. Petitioner h
benefited from its possession of the property since the same has been the site of Makati West High School since
school year 1986-1987. This Court will not condone petitioner's blatant refusal to settle its legal obligation aris
from expropriation proceedings it had in fact initiated. It cannot be over-emphasized that, within the context of
State's inherent power of eminent domain,

. . . [j]ust compensation means not only the correct determination of the amount to be paid to the ow
of the land but also the payment of the land within a reasonable time from its taking. Without prom
payment, compensation cannot be considered "just" for the property owner is made to suffer
consequence of being immediately deprived of his land while being made to wait for a decade or m
before actually receiving the amount necessary to cope with his loss [Cosculluela v. The Honora
Court of Appeals, G.R. No. 77765, August 15, 1988, 164 SCRA 393, 400. See also Provinc
Government of Sorsogon v. Vda. de Villaroya, G.R. No. 64037, August 27, 1987, 153 SCRA 291].

The State's power of eminent domain should be exercised within the bounds of fair play and justice. In the case
bar, considering that valuable property has been taken, the compensation to be paid fixed and the municipality is
full possession and utilizing the property for public purpose, for three (3) years, the Court finds that the municipa
has had more than reasonable time to pay full compensation.

WHEREFORE, the Court Resolved to ORDER petitioner Municipality of Makati to immediately pay Philipp
Savings Bank, Inc. and private respondent the amount of P4,953,506.45. Petitioner is hereby required to submi
this Court a report of its compliance with the foregoing order within a non-extendible period of SIXTY (60) DA
from the date of receipt of this resolution.

The order of respondent RTC judge dated December 21, 1988, which was rendered in Civil Case No. 13699, is S
ASIDE and the temporary restraining order issued by the Court on November 20, 1989 is MADE PERMANENT.

SO ORDERED.
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